Role of Independent Directors in Corporate Governance: A Study on Indian Defence Public Sector Undertakings

Abstract

Business activities spreading across the continents, shareholders scattered across the world and investments by institutional investors created necessity to have an independent member on the Board who takes impartial and disinterested decisions. Corporate governance disclosures would depend upon expectations of regulators and stakeholders. SEBI's listing Agreement DPE guidelines focused on the induction of independent directors on the Boards as well as on various Board committees, along with other countries all over the globe. Independent Directors would bring an element of objectivity to Board processes in the general interests of the company and thereby to benefit both majority as well as minority shareholders and other stakeholders. They would help the company Boards by providing fresh and independent judgment to the strategic thinking and independent decision making. They would contribute to the development of sound business strategies and performance monitoring. The independent directors would ensure and assure that the Board decisions would not be based on narrow vision. They would constitute necessary component of a balanced Board structure where in-depth knowledge of executive directors was blended with wider experience and knowledge of independent out-side directors. The role of independent directors is effective in DPSEs.